What is Bitcoin?
Bitcoin (trading symbol BTC) is the first and biggest virtual currency as well as payment system. It was created by Satoshi Nakamoto and introduced on 3rd January 2009. The reasons why Bitcoin was created in the first place was to implement a peer-to-peer transactions system that was not under the control of World Central Banks. Bitcoins transactions are verified, regulated and recorded by a public distorted system called a BlockChain.
How Bitcoin is generated
Bitcoins are generated by a process called ‘Mining’. This process requires computer processing power to keep record and register bitcoins. The amount of Bitcoins available due to this process is both at finite supply and fixed rate. This means not only that we know exatly how much Bitcoins has is in circulation, but more importantly the limit of how many Bitcoins can be created through mining.
Factors influencing Bitcoin Price
Bitcoin differs from other currencies for the simple fact that it is not backed by precious metals like gold. In fact, Bitcoin isn’t a fiat currency hence it is particularly volatile. Most traders believe this is the real reason (at least at this moment in time) of the great interest towards Bitcoins, as traders seek opportunities to maximise their trading profits with a relatively smaller risk. However, Bitcoins can be heavily influenced
by external factors which normally would not affect the normal FX market, such as new regulations (ie. China banning ICOs delivered
a 25% drop in Bitcoin price in 1 day), negative/positive news and the general reputation of Crypto currencies.
Is it possible to make money by trading Bitcoin?
In short, the answer is YES. However, a number of risk factors must be weighted in. Nowadays it is possible to trade Bitcoins against all major
traditional currencies or in pair with other crypto currencies such as Ethereum (BTC/ETH). However, especially if you are a novice trader,
we recommend trading Bitcoins against the EUR or the US Dollar (BTC/EUR or BTC/USD), as these are the most stable currencies and would essentially
give traders the opportunity to execute transitions between an highly volatile asset and a very stable currency.
What’s so good about Bitcoin?
Bitcoins is set to bring a total revolution to the currency market, as transactions are made between end users in a peer-to-peer
fashion and without any involvement from Central Banks. In fact, Bitcoin uses no bank and is accessible to anyone regardless
of their location and financial status. Individuals willing to buy Bitcoins do not need to hold a bank account; all they need is internet access,
in order to send Bitcoin transactions from 1 digital address (called wallet) to the other.
Bitcoin Exchanges or Bitcoin Brokers?
When choosing the broker to trade Bitcoins with, the first thing you need to decide is whether to trade with an exchange or a CFD broker.
This is a very important step in your way to make profits from crypto, as the 2 entities do have substantial differences between each other.
Exchanges like CoinBase, CoinMama and Kraken are places where you can buy (and trade) physical currencies.
Although these sites have grown exponentially in popularity in the last year, they are NOT regulated entities and do present a number of issues related to:
- the slow process of uploading customer funds into the site wallet, due to the complexity and the needed computer processing power of mining;
- hard and tricky withdrawal processes;
- complete lack of regulation, meaning your funds will not be ensured if the exchange goes burst;
- slow servers, affecting trading performances especially during periods of high demand and volatility.
These are places where customers can speculate on Bitcoin price moving up or down. All brokers presented and carefully reviewed
on this site are regulated by either the British FCA (Financial Conduct Authority) or the Cypriot Cysec (Cyprus Securities and Exchange Commission)
therefore if you decide (and we recommend you to do so) to trade with one of these brokers, your funds will be ensured by the regulator.
This means that even if the broker you are trading with goes burst, your funds will be sent back to you in a short period of time.